In response, Ahmed Wali Karzai shut down the Kandahar legislature this week by refusing to lead the provincial council until he can clear his name.

"The shura is not going to do anything until this thing is cleared up," he told McClatchy in a telephone interview Monday, referring to the 14-member council. "If they can find one thing in this report that is true, I am ready to accept any kind of punishment."

The eight-page Defense Ministry report comes as American strategists are counting on the Kandahar kingpin to be a key ally in the evolving U.S.-led effort to drive the Taliban out of their spiritual capital and bolster a pro-Western government there.

However, the latest dispute pits Ahmed Wali Karzai, a member of Afghanistan's dominant Pashtun ethnic group, against the local Afghan Army corps commander, who's considered an ally of a rival Pashtun leader, and against the defense ministry in Kabul, which is largely controlled by Tajiks from the northeast of the country.

Business rivals fight over land

According to the report, a copy of which McClatchy obtained, Afghan officials who are responsible for protecting military land in Kandahar told investigators that Ahmed Wali Karzai intervened to stop them from retaking 150 acres that are being used in part by two Karzai allies who control much of the private security business in Kandahar.

"When the delegation asked these officials why they had neglected their work, they told them, 'We were told orally by Ahmed Wali not to touch these guys; let them work,' " said Maj. Gen. Sher Mohammed Zazai, the Afghan Army corps commander in Kandahar, who ordered the investigation.

Investigators concluded that Ahmed Wali Karzai's friends, allies and relatives from the Pashtun Popalzai tribe were building offices, housing projects and parking lots illegally on more than 1,000 acres of government land in and around Kandahar city.

"These are Ahmed Wali Karzai's people," said General Zazai, who urged the provincial council to help him reclaim the government land seized by "powerful people."

Ahmed Wali Karzai said he'd refuse to take part in council meetings until the Defense Ministry sent a special delegation to investigate the charges.

"There are more than 100,000 Popalzai in Kandahar, so I am responsible for anything they do?" he said. "If an American commits a crime in Afghanistan, should we blame it on Obama?"

Kandahar council sides with Ahmed Wali Karzai

The Kandahar provincial council joined Karzai in the strike, and the council's deputy criticized the report as a politically motivated hit piece meant to undermine Karzai's unparalleled influence in Kandahar.

"If Ahmed Wali Karzai does not come to the council, we won't come either," said Haji Agha Lalai, the body's deputy head.

In the past, Ahmed Wali Karzai has come under scrutiny for his role in pushing a modern Kandahar housing-development project spearheaded by brother Mahmoud Karzai.

As the head of the Afghan Aarmy corps in Kandahar in 2006, Gen. Ramatullah Raufi said in a recent interview, he'd confronted Ahmed Wali Kazai and temporarily blocked expansion of the project, known as Aino Mina, on government land.

General Raufi was tapped to be Kandahar's provincial governor in 2008, but he said he was ousted from the post after repeatedly clashing with Ahmed Wali Karzai over business deals.

Ahmed Wali Karzai dismissed Raufi as a thief who was tossed out of office after three months for trying to steal government money.

"Raufi is a pimp," Karzai said. "He's corrupt up to his neck."

(Special correspondent Hashim Shukoor contributed to this story from Kabul.)